The ball has started rolling. After the alleged dissapearance of a Barclays bond trader and their running to the Bank of England for emergency liquidity another Bank hit the rocks today the appropriately named Northern Rock.

What is not being told deliberately is that 33% of new mortgages are Buy 2 Let. Northern Rock is probably exposed significantly in this sector as well as offerring high interest rates which it cant pay as business in general is not doing that well.

Of course the system is a sham, if enough people went to withdraw their money out of the banks then the system would be exposed for what it is.

A classic run on the banks is what they fear, a loss in confidence in the sham which is why Politicians, the FSA & experts alike are trying to encourage people to leave their money where it is.

Further yesterday the BBC used smoke & mirror tactics stating that normally banks led on customer savings. While this is partially true, what they keep joe public in the dark about is that they do not lend the savings, they simply use the amount of savings (as well as their deposits with the BOE) as a base to lend up to 10 times or more that amount.

Simply creating imaginary money out of thin air.

They claim Nothern Rock is not in danger of collapse, this is true while the BOE acts as a lender of last resort. However if enough people wanted to withdraw their money from the banks there would be a serious danger of either the BOE having to print real money (causing hyper inflation) or the situation becoming unstable.

95% of all so called money does not exist anywhere other than on a computer screen.

I'd suggest this is an opportunity to get the superb money is debt video out to the people to expose this sham.

i've stopped paying my mortgage..i hope others will follow because its just a big scam creating money out of thin air and charging interest...don;t play the zionist's game..i have also stopped paying my taxes that are being spent on the Iraq war at £3.2m per day_________________http://www.mindcontrolforums.com/pro-freedom.co.uk/part_6.html

i've stopped paying my mortgage..i hope others will follow because its just a big scam creating money out of thin air and charging interest...don;t play the zionist's game..i have also stopped paying my taxes that are being spent on the Iraq war at £3.2m per day

How do you plan to tackle the resulting repossession?

Can you offer advice to those who wish to stop paying taxes who are in jobs where the employer pays tax on their behalf?

Just questions not criticism._________________I completely challenge the official version of events - I AM NOT A 9/11 TRUTH CRITIC - I AM NOT A 9/11 TRUTH CRITIC - I AM NOT A 9/11 TRUTH CRITIC - I AM NOT A 9/11 TRUTH CRITIC -I AM NOT A 9/11 TRUTH CRITIC - I AM NOT A 9/11 TRUTH CRITIC - I AM NOT A 9/11 TRUTH CRITIC

i've stopped paying my mortgage..i hope others will follow because its just a big scam creating money out of thin air and charging interest...don;t play the zionist's game..i have also stopped paying my taxes that are being spent on the Iraq war at £3.2m per day

How do you plan to tackle the resulting repossession?

Can you offer advice to those who wish to stop paying taxes who are in jobs where the employer pays tax on their behalf?

Just questions not criticism.

well i've taken most of the equity out of the house so not really bothered if it gets repossessed besides i've always wanted to be a traveller...as for paying tax you can start by with holding your community charge or go self employed like i did...we have all become sheep in this country,time to remove the masonic wool from our eyes and rule ourselves_________________http://www.mindcontrolforums.com/pro-freedom.co.uk/part_6.html

i've stopped paying my mortgage..i hope others will follow because its just a big scam creating money out of thin air and charging interest...don;t play the zionist's game..i have also stopped paying my taxes that are being spent on the Iraq war at £3.2m per day

How do you plan to tackle the resulting repossession?

Can you offer advice to those who wish to stop paying taxes who are in jobs where the employer pays tax on their behalf?

Just questions not criticism.

well i've taken most of the equity out of the house so not really bothered if it gets repossessed besides i've always wanted to be a traveller...as for paying tax you can start by with holding your community charge or go self employed like i did...we have all become sheep in this country,time to remove the masonic wool from our eyes and rule ourselves

I've thought a lot about being a traveller, but how would you get internet access? If you get a wireless laptop doesn't that affect your health?

i've stopped paying my mortgage..i hope others will follow because its just a big scam creating money out of thin air and charging interest...don;t play the zionist's game..i have also stopped paying my taxes that are being spent on the Iraq war at £3.2m per day

How do you plan to tackle the resulting repossession?

Can you offer advice to those who wish to stop paying taxes who are in jobs where the employer pays tax on their behalf?

Just questions not criticism.

well i've taken most of the equity out of the house so not really bothered if it gets repossessed besides i've always wanted to be a traveller...as for paying tax you can start by with holding your community charge or go self employed like i did...we have all become sheep in this country,time to remove the masonic wool from our eyes and rule ourselves

I've thought a lot about being a traveller, but how would you get internet access? If you get a wireless laptop doesn't that affect your health?

not sure Stephen but i think your health would be more than compensated by the out door life and lack of stress and hassle...besides you can still log in at libraries or internet cafes...there's a book called motorhoming fulltime that might be useful_________________http://www.mindcontrolforums.com/pro-freedom.co.uk/part_6.html

i've stopped paying my mortgage..i hope others will follow because its just a big scam creating money out of thin air and charging interest...don;t play the zionist's game..i have also stopped paying my taxes that are being spent on the Iraq war at £3.2m per day

How do you plan to tackle the resulting repossession?

Can you offer advice to those who wish to stop paying taxes who are in jobs where the employer pays tax on their behalf?

Just questions not criticism.

well i've taken most of the equity out of the house so not really bothered if it gets repossessed besides i've always wanted to be a traveller...as for paying tax you can start by with holding your community charge or go self employed like i did...we have all become sheep in this country,time to remove the masonic wool from our eyes and rule ourselves

If losing your home is something you can live with then that's fine, not so good for anyone with a family, not to mention if everyone decided to live on the road. Countless mobile homes all looking for somewhere to park up come the start of Eastenders. You've only got to look at the relatively tiny number of travellers/gypsies/whatever to appreciate the problems they have dropping anchor.

Having been involved in a few cases where people have simply stopped paying into the kitty (from a police perspective, there to intervene in breach of the peace situations), I have never seen one that ended nicely for the refusee.

I appreciate your views about banks and/or building societies, however our society is finely balanced and if we all refused to chip in (regardless of how you see Iraq), the streets would overflow with rotting household waste, plus every other possible bolt-on problem you can foresee.

Whilst you may have a few extra quid in your tin under the mattress (as you have foresaken banks), I am sure that the huge number of rats would soon make a nice warm nest out of it.

You'll have to come up with a better solution than simply 'stopping' payment. It would only work for those in a position to walk away alone into the sunset, but for Mr Average with kids, it just don't work that way._________________I completely challenge the official version of events - I AM NOT A 9/11 TRUTH CRITIC - I AM NOT A 9/11 TRUTH CRITIC - I AM NOT A 9/11 TRUTH CRITIC - I AM NOT A 9/11 TRUTH CRITIC -I AM NOT A 9/11 TRUTH CRITIC - I AM NOT A 9/11 TRUTH CRITIC - I AM NOT A 9/11 TRUTH CRITIC

i've stopped paying my mortgage..i hope others will follow because its just a big scam creating money out of thin air and charging interest...don;t play the zionist's game..i have also stopped paying my taxes that are being spent on the Iraq war at £3.2m per day

How do you plan to tackle the resulting repossession?

Can you offer advice to those who wish to stop paying taxes who are in jobs where the employer pays tax on their behalf?

Just questions not criticism.

well i've taken most of the equity out of the house so not really bothered if it gets repossessed besides i've always wanted to be a traveller...as for paying tax you can start by with holding your community charge or go self employed like i did...we have all become sheep in this country,time to remove the masonic wool from our eyes and rule ourselves

If losing your home is something you can live with then that's fine, not so good for anyone with a family, not to mention if everyone decided to live on the road. Countless mobile homes all looking for somewhere to park up come the start of Eastenders. You've only got to look at the relatively tiny number of travellers/gypsies/whatever to appreciate the problems they have dropping anchor.

Having been involved in a few cases where people have simply stopped paying into the kitty (from a police perspective, there to intervene in breach of the peace situations), I have never seen one that ended nicely for the refusee.

I appreciate your views about banks and/or building societies, however our society is finely balanced and if we all refused to chip in (regardless of how you see Iraq), the streets would overflow with rotting household waste, plus every other possible bolt-on problem you can foresee.

Whilst you may have a few extra quid in your tin under the mattress (as you have foresaken banks), I am sure that the huge number of rats would soon make a nice warm nest out of it.

You'll have to come up with a better solution than simply 'stopping' payment. It would only work for those in a position to walk away alone into the sunset, but for Mr Average with kids, it just don't work that way.

Telecasterisation, your not seeing the bigger picture we all have to refuse the system one way or another, I know that givening up a home is a bit much for some people, but most of are tax money is wasted and used to control us, plus the sh*t will hit the fan! And there will be bags of rubbish everywere, for a period of time. BUT WE DON'T NEED MONEY TO CONTROL US! MFP is trying to be a few steps ahead of the game. And I carn't blame him for that, I would if I could.

I encourage any one viewing this thread who wants to be free of debt induced serfdom to stop paying loans mortgages and credit cards!!!
The banking system is teetering on the edge of doom right about now,so how about all us mugs stop playing the game they designed and built to enslave us and give the FXXXers a nice hard shove over the edge by removing our money and more importantly our interaction from this monstrous system.
I wouldnt worry to much about them taking court action repossession ect as this process takes some time for them to get under way and with the looming banking credit crisis if enough people opt out NOW the resources just will not be available to chase all the nonpayers through the decidedly long winded UK court system.
seriously now is the perfect time to turn our back on the banks, hit em while they are on the ropes! _________________Today's mighty oak is just yesterday's nut, that held its ground.
David Icke

i am sure everyone knows this is all deliberate
every few years when the NWO boys fancy filling their boots again they shake the trees and see what falls down.
Northern Rock was doing firn. It was the best run building society turned bank and had good profits and good turnover.
Absolutely no exposure to self certification mortgages.
But the Bank of England LEAKED some confidential data that Northern Rock had applied for a borrowing facility.
It is this leak that has triggered the run not anything to do with the bank itself. Dont be surprised if an overseas bank buys up Northern Rock for next to nothing. That is the gameplan buy up assets on the cheap.
The same thing is occuring with ITV at the moment with the boycott of advertising taking place to put the squeeze on finances.
the same thing happens so many times when a cabal of financial columists and media types talk down or talk up a company and it's prospects._________________

i am sure everyone knows this is all deliberate
every few years when the NWO boys fancy filling their boots again they shake the trees and see what falls down.
Northern Rock was doing firn. It was the best run building society turned bank and had good profits and good turnover.
Absolutely no exposure to self certification mortgages.
But the Bank of England LEAKED some confidential data that Northern Rock had applied for a borrowing facility.
It is this leak that has triggered the run not anything to do with the bank itself. Dont be surprised if an overseas bank buys up Northern Rock for next to nothing. That is the gameplan buy up assets on the cheap.
The same thing is occuring with ITV at the moment with the boycott of advertising taking place to put the squeeze on finances.
the same thing happens so many times when a cabal of financial columists and media types talk down or talk up a company and it's prospects.

You think they can control what happens. I think the roots of the present crisis lie back over the last 30 years when finance took total control of the economy at the expense of manufacturing. As a steel magnate once said when he sold a profitable steel works and didn't care what happened to the employees or the fact that the new owners closed the factory down, he is in the business of money, not in the business of steel.

Blair inaugurated Buy to Let and got rid of 1 million odd manufacturing jobs. Debt financing became a new by word for ...growth, with everyone in debt up to their eyeballs to buy stuff they dont need as almost all public places have been taken over by shops and shopping malls. If you aint a real junkie you end up being a debt junkie.

Last month was the first time UK PLC spent more than it produces and this present crisis will continue. Bailing out one bank to restore faith in the banking system wont help the other banks. What is funny is that if a business is not doing well, the government always says close it down, when a bank aint doing well, bail it out.

Taxpayers have to bail out banks and also support the closure of independent energy resources like coal in a policy where the rentier/financier becomes independent totally of countries, history, nation states. The City of London is already controlled by large US investment houses. This crisis is due to the collapse of the dollar as the reserve currency of world trade. It will only get worse.

Putting money under the mattress and growing your own food will become inevitable consequences of this. I cant see how they can stop the rot.

i've stopped paying my mortgage..i hope others will follow because its just a big scam creating money out of thin air and charging interest...don;t play the zionist's game..i have also stopped paying my taxes that are being spent on the Iraq war at £3.2m per day

How do you plan to tackle the resulting repossession?

Can you offer advice to those who wish to stop paying taxes who are in jobs where the employer pays tax on their behalf?

Just questions not criticism.

Sell up and use the equity to buy something cheaper! Downsize if you have to, move abroard come on its not rockit science _________________'Come and see the violence inherent in the system.
Help, help, I'm being repressed!'

“The more you tighten your grip, the more Star Systems will slip through your fingers.”

Last time i was in Leeds 3 bed house Terrace was £40k
you can pick up property in Europe from as little as 7,500 and even Berlin from 15,000 Euro._________________'Come and see the violence inherent in the system.
Help, help, I'm being repressed!'

“The more you tighten your grip, the more Star Systems will slip through your fingers.”

Actually, i can remember when British & Commonwealth Bank collapsed.
It was Britain's 4th largest financial institution.

Basically these collapses triggered usually by the Bank of England who pull the carpet from under the campany and then feed the remains to the wolves.

Businesses going into recivership and administration are at record levels. But this is all triggered by the policies of Gordon Brown. Overtaxing the economy while at the same time creating a housing price boom which was unsustainable. Look prices were at record levels so what steps did Chancellor Brown take.
1. Allow tax relief for buying a flat on top of a shop.
2. Cut stamp duty
3. subsidise housing for key workers and part buy part rent schemes.

How does any of these moves do anything other than fan the flames further? Labour does not understand business and it does not understand basic economics. British people are over 1 Trillion pounds in debt and rising. Our companies are being swallowed up by foreign interests such as private equity cartels.

Northern Rock will disappear but it's mortgage book, its branches and its deposits will be bought up on the cheap.
BCCI - Bank of Credit and Commerce international went bust a few years back too when the bank of england withdrew it's licence.

Barclay's which applied for a loan facility to help it in it's takeover of ABN Amro did not suddenly get a run on ot's deposits did it?
Because Barclay's is one of the banks closely linked to freemasonery and the Illuminati.
Northern Rock is a good old former British mutual society._________________

Sell up and use the equity to buy something cheaper! Downsize if you have to, move abroard come on its not rockit science

This is becoming like a Mills & Boon classic, all that's missing is the rose tinted specs.

No-one is thinking this through - stopping paying into the kitty would destroy the very fabric of our society. Yes, I accept that much of it goes on defence related issues, but aspects of our transport networks rely on maintenance that are locally funded, the health services relies on wages being paid, = no ambulance drivers, plus no fire engines = a good idea?

What about the enormous number of the elderly who rely on home help, many could not survive without their pensions, they could not 'move to Germany'? The terminally ill, the short-term ill who need to see a doctor. No rubbish collected, most businesses would cease to function as key services would simply stopped delivering. No-one would get paid, besides which there will be nothing to buy as the shops will be empty and everyone who had moved abroad would then complain about how nonsense it is there.

All just the tip of the iceberg.

Our current system is far from ideal, but that is what we have and simply turning it off is far worse.

Whilst this is all a very lovely 'alternative' perspective, the majority of society will never 'opt out', hence those few that do will be pursued and processed by the existing legal system and where possible, prosecuted. This is not me being pedantic, it is simply the way it is._________________I completely challenge the official version of events - I AM NOT A 9/11 TRUTH CRITIC - I AM NOT A 9/11 TRUTH CRITIC - I AM NOT A 9/11 TRUTH CRITIC - I AM NOT A 9/11 TRUTH CRITIC -I AM NOT A 9/11 TRUTH CRITIC - I AM NOT A 9/11 TRUTH CRITIC - I AM NOT A 9/11 TRUTH CRITIC

It has all the fervour and frenzy of an evangelist meeting and what's
happening here should put the fear of god into homeowners around the
world.

Houses are being knocked down today for 30 or 40 per cent less than
their owners paid just a few months ago.

PROFESSOR ROBERT SHILLER, ECONOMICS, YALE UNIVERSITY: Well, the last
time that we saw a home price fall as big as the one we have just
seen, is 1941. And ah, it's surprising, that was the year the US
entered World War II.

PAUL BARRY: This year and next, more than two million American
families will lose their homes.

JIM ADAMS, RIVERSIDE HOMEOWNER, CALIFORNIA: We're in a house now
that's worth a lot less than what we paid for it.

PAUL BARRY (to Jim Adams): Have you lost the money that you made?

JIM ADAMS (to Paul Barry): Yes Sir.

PAUL BARRY: So why should Australians care if the housing market in
America is crashing? Well tonight you'll find out.

The so-called subprime mortgage crisis has sent world stock markets
into a spin, caused panic in credit markets so banks are afraid to
lend to each other, sent an Australian hedge fund bankrupt, and forced
central banks to pump hundreds of billions of dollars into the system
to stop it from seizing up. It now threatens to push America and
possibly the rest of the world into recession.

Oh yes, and there's one thing a little bit closer to home.

PPR: We've seen house prices in one part of California down thirty,
forty per cent. Do you think that's possibly going to happen in
Australia or anything like it?

PROFESSOR ROBERT SHILLER, ECONOMICS, YALE UNIVERSITY: Yeah, I think
so, because that would just bring us back to where we were a few years
ago, before all this boom got so out of hand.

PAUL BARRY: Tonight on "Four Corners", the biggest mortgage meltdown
since the crash of 1929.

(On screen text: "MORTGAGE MELTDOWN", "Reporter: PAUL BARRY")

JIM ADAMS, RIVERSIDE HOMEOWNER, CALIFORNIA (speaking at a table with
Paul Barry and two family members): The earthquake fault is another
thing that is an issue for us because -

FRANKIE (to Paul Barry): If we have a major earthquake you can't get
out of Southern California.

PAUL BARRY (to Frankie): You can't get out?

FRANKIE (to Paul Barry): There's no way to get out.

JIM ADAMS, RIVERSIDE HOMEOWNER, CALIFORNIA: These freeways are up to
10 storeys high, the over-passes. This freeway interchange right here
(referring to map) has collapsed once already ...

PAUL BARRY: Jim Adams is one of the nicest guys you'll ever meet, even
if at times he might seem a little paranoid.

FRANKIE (to Paul Barry): We have enough just canned goods under the
stairs. We could probably go 30 days, maybe, yeah ...

PAUL BARRY: Jim and his family fear earthquakes, terrorism, civil
disorder and a rising crime rate, which is why they've stocked the
house with emergency rations and have five guns close to hand.

JIM ADAMS, RIVERSIDE HOMEOWNER, CALIFORNIA (to Paul Barry): There's
one, just about one hidden in every room in the house.

PAUL BARRY: But what hit Jim Adams between the eyes was something he
never imagined - his own desire to make a killing.

JIM ADAMS, RIVERSIDE HOMEOWNER, CALIFORNIA: It's a lazy man's way of
making money, it's a gamble, but at that time we didn't look at it as
being a gamble. We really saw it as a sure thing. We really thought
that we could move into this house, keep it for a year and then turn
around and sell it and have our retirement money and our retirement
house paid for.

I keep relating it to like buying a car. You go into a car lot and the
sales people come swarming all around you and it's the smell of the
new car, the sound of that engine, the total excitement of being able
to get into something new. It's the same way with the house. It's the
smell, the looks, the excitement, it's oh it's new, we can do this.
And when you start looking at the paperwork and they tell you ...

PAUL BARRY (to Jim Adams): And you thought, "Wow, we're going to make
some money."

JIMMY ADAMS, REAL ESTATE AGENT, RIVERSIDE, CALIFORNIA: This is what
this area always used to look like, on both sides of the car. It used
to be nothing but rolling hills and granite stones.

PAUL BARRY: Jim's son Jimmy was also making money out of the boom - as
a Riverside real estate agent.

JIMMY ADAMS, REAL ESTATE AGENT, RIVERSIDE, CALIFORNIA (speaking to
Paul Barry, driving car): So where we are right now is we're in kind
of the middle of the city of Moreno Valley, so the major home builders
came in and bought up large plots of land and they started grading ...

PAUL BARRY: Here on the eastern fringe of Los Angeles, in what's known
as the Inland Empire, there's been a huge building boom over the last
few years.

In three years from 2003, prices more than doubled and anyone on the
bandwagon made a fortune.

JIMMY ADAMS, REAL ESTATE AGENT, RIVERSIDE, CALIFORNIA: The boom was
phenomenal. You couldn't make any more money as a real estate person
or a professional involved in this type of industry, you could make a
tonne of money and people were coming to you out of the woodwork and
they were wanting to buy homes, they were wanting to sell homes and
there was a lot of, it was a perfect storm because you had lots and
lots of people selling and money was being made from all different
sides.

PAUL BARRY (to Jimmy Adams): And prices going up and up and up and up?

JIMMY ADAMS, REAL ESTATE AGENT, RIVERSIDE, CALIFORNIA: It was just
unbelievable to watch houses go on the market for one day and be sold
the next day and sold for more than what they wanted.

PAUL BARRY: Four thousand kilometres away from Los Angeles at Yale
University, Professor Bob Shiller has been tracking this crazy surge
in American house prices.

Shiller is the expert in the field but he's never seen anything like
this before.

PROFESSOR ROBERT SHILLER, ECONOMICS, YALE UNIVERSITY (referring to
graph): The blue line here shows the price of a home corrected for
inflation, CPI inflation. And the red line is rent ...

PPR: That is some increase, isn't it? It just goes straight up in the
air.

For the last two years he has been warning that exactly the same was
bound to happen with American house prices.

PROFESSOR ROBERT SHILLER, ECONOMICS, YALE UNIVERSITY: Both the housing
boom and the dot-com boom occurred close in time, it was the same
people, it was driven by the same sense of economic possibility and it
was like a gold rush. You know when they discover gold, people go out
staking their claim. That was the dot-com boom and now people, it's
remarkable, think they've found gold in their own backyard, all
they've got to do is buy a house and so, it's a remarkable delusion I
think that has developed. Just buy a house and you'll be rich,
amazing, I don't know how we got here, but we're here.

PAUL BARRY: The short answer to how we got here is September the
11th.

When the World Trade Centre collapsed there were fears that world
stock markets would follow, so hundreds of billions of dollars were
pumped into the banking system by the US Federal Reserve.

ALAN GREENSPAN, CHAIRMAN, US FEDERAL RESERVE AUGUST 1987 - JANUARY
2006 (speaking at press conference): Much economic activity ground to
a halt last week ...

PAUL BARRY: Fed Chairman Alan Greenspan then cut interest rates over
the next two years to 1 per cent to lift the economy out of
recession.

And with all this cheap money to be had, America's banks were
desperate for customers.

JIMMY ADAMS, REAL ESTATE AGENT, RIVERSIDE, CALIFORNIA: Everybody,
everybody and anybody. Anybody who had a, what we call a FICO score of
say 500, 525 to, all the way up to the top. Everybody was able to
borrow money, it was really unbelievable who could borrow money.

PAUL BARRY (to Jimmy Adams): And what do you have to do to get a FICO
score of 500?

JIMMY ADAMS, REAL ESTATE AGENT, RIVERSIDE, CALIFORNIA: Nothing
(laugh). Breathe, you know fog and air. FICO scores of 500 usually are
indicative of people who have not paid their bills on time, or they
have little to no credit, no credit history, no credit lines, maybe
they've had a bankruptcy, a foreclosure or a repossession. That's what
puts people into a 500 FICO score range.

(Excerpt from TV advertisement):

VOICEOVER: This is Pete. He recently got a letter offering him a new
credit card with a $3000 limit and an interest rate of 18 per cent,
which is odd because Pete is a dog ...

(End of excerpt)

PAUL BARRY: It was the biggest binge in lending America has ever seen,
but Australians will find it familiar.

(Excerpt from TV advertisement):

VOICEOVER: ... Even if your credit is less than perfect, Ameriquest
can help. Call 1866 Ameriquest today ...

(End of excerpt)

PAUL BARRY: Everyone was encouraged to refinance their houses, unlock
the equity in their home, spend big on that holiday or new TV, or take
a ride on the real estate boom. Housebuilders also offered cheap
finance to buyers of their properties.

And so a new product took over the market - subprime loans.

A subprime loan is one that isn't quite top quality, because it's
being given to people who wouldn't normally get credit or wouldn't get
that much, and as a result it carries an extremely high interest rate,
often up to 16 per cent, and the banks love it because it's so
profitable.

There's a NINJA loan, which is "No income, no job, no assets," but you
still get the money. And there's a Piggy Back loan where two sit on
top of each other so you can get 100 per cent finance, and
colloquially they are often known as LIAR loans because someone
somewhere isn't telling the truth.

MARK SEIFFERT, HOUSING ACTIVIST, CLEVELAND OHIO: In a way the bankers
deserve to get screwed. If you're that damn stupid to make loans
without requiring proof of income, proof of the asset by chance, you
know, it's shame on you. You deserve to get screwed, and that's
exactly what we have here.

Mark Seiffert is a housing activist in Cleveland, the foreclosure
capital of the USA.

(Excerpt from discussion around table at ESOP):

FACILITATOR (to man): Your name, your lender.

MAN: Anthony Bird (phonetic). My lender is (inaudible).

FACILITATOR: Okay, ma'am.

WOMAN: I'm Ronald Clemens (phonetic), lender Countrywide Home Loans.

WOMAN2: We're from East Cleveland and we heard about your program
going through a neighbourhood housing service.

FACILITATOR: Okay.

(End of excerpt)

PAUL BARRY: Mark Seiffert is a housing activist in Cleveland Ohio, the
foreclosure capital of the United States. The hundreds of people who
file into his offices every week are not rich and are not speculators,
but they've been persuaded to take out expensive subprime loans they
can't pay back and should never have got into.

WOMAN (speaking to counsellor): ... Mortgage started in September at
an adjustable rate, which is almost $300 more than I was paying. When
my husband lost his job ...

PAUL BARRY: Now their city is now seeing a tidal wave of evictions and
foreclosures.

MARK SEIFFERT, HOUSING ACTIVIST, CLEVELAND OHIO: It's devastating. I
mean, you know we've had, in Cleveland there's supposedly about 80,000
property units, buildings. Ten thousand of those are vacant as of
today. And we're seeing foreclosures increasing by more than 300 per
cent over the last couple of years.

VOICEOVER: Is your arm killing you too? Call the mortgage doctors at
MGM International Mortgage Corporation. They'll help you get a low
fixed rate with lower monthly ...

(End of excerpt)

PAUL BARRY: The ticking time bomb at subprime is the ARM, the
automatically resetting mortgage, or, exploding ARMS as some people
call them. They start off a nice low rate to suck people in and then
after two or three years reset with a dramatic increase in payments.
They've been all the rage over the last two years and some two million
of them are about to blow up, wreaking havoc on the people who took
them out - like Henry Mitchell.

PAUL BARRY (to Henry Mitchell, referring to photographs): Is that him
there too?\

HENRY MITCHELL, HOMEOWNER IN FORECLOSURE, CLEVELAND: That's him. This
the last picture, you know, never gave me any trouble ...

PAUL BARRY (to Henry Mitchell): How old was he?

HENRY MITCHELL, HOMEOWNER IN FORECLOSURE, CLEVELAND: He was 27 years
old. Never had a record, never been in trouble with the police ...

PAUL BARRY: Henry Mitchell has had one hell of a year. In April his
youngest son Germaine was shot dead in the centre of Cleveland after a
basketball game.

HENRY MITCHELL, HOMEOWNER IN FORECLOSURE, CLEVELAND: While he was out,
on his way back, he went to the street that he was still with his
fiancé at that time, someone robbed him and shot him twice in his
lower back. He told them he didn't have any money but they murdered
him anyway.

PAUL BARRY: Henry and his wife will now have to bring up their 10-
month-old grandson.

Henry Mitchell worked 35 years at General Motors and saved all his
life to buy this beautiful home on two acres.

HENRY MITCHELL, HOMEOWNER IN FORECLOSURE, CLEVELAND (showing Paul
Barry around his property): Well this is the home that we purchased
five years ago ...

PAUL BARRY: He put his kids through college and paid his parents'
medical bills when they got sick. But two weeks before his son was
killed, his mortgage reset.

HENRY MITCHELL, HOMEOWNER IN FORECLOSURE, CLEVELAND: ... Had plans to
retire here. They sent a letter to me about a week prior to that
payment due in April that it would escalate, you know, from like 8.4
to almost 13 per cent and that would be almost $1000 more.

PAUL BARRY (to Henry Mitchell): Thirteen per cent?

HENRY MITCHELL, HOMEOWNER IN FORECLOSURE, CLEVELAND: Thirteen yes.

PAUL BARRY (to Henry Mitchell): Eight to 13 per cent?

HENRY MITCHELL, HOMEOWNER IN FORECLOSURE, CLEVELAND: Yes. I just
didn't have the money in my budget then on my pension, retired and
then on, getting social security I just didn't have any extra money.

PAUL BARRY: Henry Mitchell should have known he'd be paying more but
he could have had no idea it would be so much. And his broker
certainly never told him.

He now has a court order for possession of the house and he'll be
evicted any day unless his lawyer can save him.

HENRY MITCHELL, HOMEOWNER IN FORECLOSURE, CLEVELAND: I'm just praying
that a miracle will happen for us because pretty much now that's what
we need you know.

PAUL BARRY (to Henry Mitchell): What's it going to mean to you if you
lose it?

HENRY MITCHELL, HOMEOWNER IN FORECLOSURE, CLEVELAND: Well we're going
to be devastated, we're going to be homeless and we don't know like I
say where we're going to go or how we're going to find another
dwelling place because people are reluctant and banks and institutions
are reluctant to give you a chance when you're in this situation.

PAUL BARRY: Back in the sunbelt the foreclosure rate is also breaking
all records, with more and more people losing their homes or walking
away. This new estate in Moreno Valley where Los Angeles meets the
desert was finished just six months ago but the exodus has already
begun.

JIMMY ADAMS, REAL ESTATE AGENT, RIVERSIDE, CALIFORNIA (to Paul Barry,
driving): What do we look for is generally a dead lawn, a lawn that
hasn't been taken care of, weeds that are coming up, people stop
paying their water bill for taking care of their lawns.

PAUL BARRY (to Jimmy Adams): One there?

JIMMY ADAMS, REAL ESTATE AGENT, RIVERSIDE, CALIFORNIA: There's one
there, you'll see two here, most of these houses are already vacant.
You can tell if they're vacant just by the way they're sitting.

PAUL BARRY (to Jimmy Adams): So this is a house that someone has been
in for six months and is already walking away from it?

JIMMY ADAMS, REAL ESTATE AGENT, RIVERSIDE, CALIFORNIA: Correct.

PAUL BARRY (to Jimmy Adams): What about this one here?

JIMMY ADAMS, REAL ESTATE AGENT, RIVERSIDE, CALIFORNIA: This one here
is already abandoned and let go, this one's already abandoned and let
go, you'll notice a lot of cards and things on the doors.

So, you know, on a street where there's probably nine different
properties you can see five of them are for sale or appear to be
abandoned.

PAUL BARRY: Foreclosure auctions like this one are now commonplace in
California, as they are in Florida, Arizona and Nevada, where the
speculative boom was biggest.

And it's no surprise if the cheer squad look happy. Today's sale of
112 houses will gross at least $30 million. Another in LA tomorrow
will do even better.

PAUL BARRY (to Michael Schack): When did you get back into these
foreclosure auctions? When did they start again?

MICHAEL SCHACK, SENIOR VP, REDC: Real Estate Disposition Corporation
was around in the 1990s and then we were dormant for a period of time
while the market was good and this year at the beginning of the year
we started to ramp up again and we have come out of hibernation. We're
back at it.

PAUL BARRY (to Michael Schack): Is it going to get even busier do you
think?

MICHAEL SCHACK, SENIOR VP, REDC: I would say absolutely it will get
even busier. We are getting lenders every day calling us and saying we
want to do this, we have builders and developers contacting us, they
want to sell through the auction. So we have plenty of customers
coming to us, many lenders coming to us, they want to sell their
properties, they've got the inventory and they see us as a fantastic
way to sell their inventory.

PAUL BARRY: But bad as the problems clearly are for California and for
Cleveland, how on earth have they spread so far as to shake the world?

The answer lies here on Wall St, because it was the big banks and
brokers here who put up the massive amounts of money that fuelled the
huge lending surge and the dodgy loans then came back here to be
parcelled up into mortgage backed securities and collateralised debt
obligations and sold to investors all around the world, with everyone
picking up fat fees along the way.

SATYAJIT DAS, AUTHOR, "TRADERS, GUNS AND MONEY": A German banker
recently said to me with a very Germanic accent, "Why is somebody not
paying their mortgage in Luneville, West Virginia," and this is a real
town by the way, "going to affect me?"

And the reason is very simple. Because of the web of transactions in
global finance now and capital flows, people from all round the world
have invested in the US.

PAUL BARRY: Satyajit Das is a world expert on hedge funds and credit
markets and an adviser to banks around the world.

Based here in Australia he has long been warning how easily a crisis
like this could develop.

SATYAJIT DAS, AUTHOR, "TRADERS, GUNS AND MONEY": To give you an idea
of global capital flows, 85 per cent of capital flows from Europe, the
Middle East, and the Far East is in to the US. And a good chunk of
that has gone into the subprime mortgage area, or the mortgage area in
general.

PAUL BARRY (to Satyajit Das): So the money comes from overseas and it
then gets lent out to people in Cleveland, Ohio?

PAUL BARRY (to Satyajit Das): So when the people in Cleveland, Ohio,
stop paying, the wave comes back again outwards?

SATYAJIT DAS, AUTHOR, "TRADERS, GUNS AND MONEY": It's like the old
saying about chaos theory: the flapping of the wings of a butterfly in
the Amazon causes a Caribbean hurricane. And that's what we're seeing
now.

PAUL BARRY: In August, these storm force winds battered the world's
stock markets. Prices on Wall St dived by 10 per cent, while
Australia, Europe and Asia took an even bigger beating. And while some
of those losses have now been clawed back the nerves remain.

But the barrage of bad news has also hit credit markets where banks
are suddenly afraid to lend to anyone, even to each other.

SATYAJIT DAS, AUTHOR, "TRADERS, GUNS AND MONEY": What we now have is a
very, very serious dislocation in the lubricant of the financial
system, which is credit. Now the analogy I always use is like a car
engine: credit is the actual oil in the engine. Now there's a big
crack and the oil's all flowing out of the engine, so the whole engine
is ceasing up. So we're getting effects everywhere and I don't think
we've seen the worst of the effects because it's going to be a rolling
contagion where things happen in one market, then another, and they
keep feeding back on themselves.

And the other thing we haven't seen as yet, which is the really,
really long term effect, is on the real economy, because so far it's
been a financial market crisis. Eventually it will affect things like
GDP growth, employment, investment and how people spend money. Once
that occurs what we're going to see is a new order of this particular
contagion. That's what makes it much worse.

PAUL BARRY: So how did it all unfold? Well, it pretty much began with
a couple of hedge funds run by Bear Stearns, a huge Wall St investment
bank, which took big bets on subprime loans.

In May, Bear Stearns admitted that one of these funds had lost six per
cent in value. Then, three weeks later, it was 23 per cent and from
there, according to Matt Goldstein who writes on hedge funds for the
American magazine "Business Week", it rapidly vaporised.

MATTHEW GOLDSTEIN, ASSOCIATE EDITOR, "BUSINESSWEEK": The value of the
bonds they had bought lost their value so quickly, and that's what
happens in a falling market, what had once been worth maybe say 100
cents on the dollar quickly became worth 50 cents on the dollar, even
25 cents on the dollar. And essentially, the hedge funds essentially
vaporised and disappeared.

PAUL BARRY (to Matthew Goldstein): Vaporised?

MATTHEW GOLDSTEIN, ASSOCIATE EDITOR, "BUSINESSWEEK": Vaporised,
there's nothing, there's nothing left. The hedge funds have, there's
literally, they finally said when Bear finally gave a total accounting
in July, they said, basically you can expect to get nothing back from
these hedge funds. Hedge funds that had raised almost $1.7 billion
from investors and at one point had borrowed up to $20 billion are now
worth nothing.

PAUL BARRY: The two Bear Stearns hedge funds finally went bust at the
end of July, but we still don't know how much money has been lost.

The last rites are being read at this bankruptcy court in Manhattan,
where an Australian hedge fund run by Basis Capital is also being laid
to rest. And the body count does not end there.

MATTHEW GOLDSTEIN, ASSOCIATE EDITOR, "BUSINESSWEEK": Once the Bear
Stearns Funds collapsed, it became known that essentially a lot of
these bonds had very little value and then that forced everyone else
to start to mark down their own bonds and in the process that started
a cascading effect where basically hedge fund after hedge fund that
own these bonds found, well we thought these were worth $100, now
they're only worth $50.

PAUL BARRY (to Matthew Goldstein): So give me a quick roll call of
who's taken a hit on this.

MATTHEW GOLDSTEIN, ASSOCIATE EDITOR, "BUSINESSWEEK": Who's taken a
hit? Well, I mean you can just about name everyone, because in the
sell-off we had in August which basically spanned the entire globe,
all hedge funds were hit even if they didn't own subprime and that's
because basically when selling gets going, it forces selling in
different markets because people have to raise money.

I mean we had here in the US, we had Goldman Sachs has a very big
hedge fund that in one week lost almost 40 per cent of its value.

PAUL BARRY: Goldman Sachs pumped $3 billion into its ailing hedge fund
to keep it going. The UK based Cheyne Finance went into receivership
owing $9 billion. The German Landesbank Sachsen needed a $20 billion
bail out. French bank BNP Paribas froze redemptions on three funds
worth $2 billion. And Australia's own Macquarie Bank admitted its
Fortress funds had lost 30 per cent of their value.

Other multi-million dollar losses or rescues have been coming thick
and fast and it's not likely that we've seen the end.

SATYAJIT DAS, AUTHOR, "TRADERS, GUNS AND MONEY": In the old days, to
use an analogy, when you actually had a lending and a borrowing
transaction people put money with a bank, the bank lends to the
client. You know where the problem is.

In the modern capital markets risk is diffused, it's everywhere.
Different investors hold different pieces of the risk and we don't
often understand the linkages fully. So the first thing is we don't
actually understand the linkages of how this will transmit to where.

The other thing is most risk is moved from banks which are regulated
and relatively transparent, to people like hedge funds. Hedge funds
are a), not regulated, they don't have to report anything, and they're
certainly not transparent. So we don't under those circumstances know
who's holding what. And obviously they're under no pressure to tell
anybody, except their investors, and this information comes out with a
lag.

But even at the core of the problem, which is the subprime, we really
don't know how bad the losses are.

Cleveland Ohio is one of the cities that made America the greatest
industrial power this world has ever seen. Its steel mills and machine
tool factories once worked round the clock to help Ford and General
Motors knock out cars by the million.

Now it's known as the rust belt. Its factories are closing, its jobs
are going, its inner city is emptying as whites flee to the suburbs.

In Cleveland one in 20 homes are now in foreclosure.

BARBARA ANDERSON, HOMEOWNER, CLEVELAND, OHIO (showing Paul Barry
around the neighbourhood): What we have here is at the very end of
this street is you have three houses - one, two, three - that are
vacant and been vandalised over the course of the last 12 years
actually ...

PAUL BARRY: It's no longer just black Americans like Barbara Anderson
who are suffering.

BARBARA ANDERSON, HOMEOWNER, CLEVELAND, OHIO: This devastation has
creeped from Cleveland, from the inner city all the way out into our
suburbs, both the inner and outer ring suburbs and now people are
paying a little more attention simply because of now who it's hurting.

PAUL BARRY: Barbara Anderson has lived on Cleveland's East Side for
the last 27 years and she's seen the neighbourhood fall apart around
her, with a great deal of help recently from what is known as
predatory lending.

BARBARA ANDERSON, HOMEOWNER, CLEVELAND, OHIO: What has happened is
that our street has gone from a street that once was full of children
laughing and talking and playing, to a street where half of it has
been wiped out. The houses are boarded up, they're empty, vacant,
vandalised and they offer a real threat to our community.

PPB: And why has that happened?

BARBARA ANDERSON, HOMEOWNER, CLEVELAND, OHIO: That has happened
primarily because of predatory lending. Mortgage services and brokers
all got together and somehow conspired, cheated, scammed and lied
people to people which resulted in them perhaps taking out mortgages
that were more than they could afford

PPB: And is that still happening?

BARBARA ANDERSON, HOMEOWNER, CLEVELAND, OHIO: That is still happening
so we are not yet at the end of this storm. We're pretty much, I would
say maybe we're at the middle but we have a long ways to go and we
will see a lot more properties being damaged and a lot of
neighbourhoods devastated by predatory lending.

(Excerpt from TV advertisement):

BROKER (white man speaking to elderly black woman at her kitchen
table): Mrs Johnson, good to see you again. This is Mike, you can
trust him, he looks just like you.

MIKE (young black man speaking to elderly woman): I'll be sucking up
to you in order to make you sign the loan.

BROKER: So, here are your low monthly payments and interest rate as we
promised. Here's where they triple. The rest of this is really just
here so that we get your house ...

(End of excerpt)

PAUL BARRY: The brokers who sold subprime loans were unregulated and
often unscrupulous. African Americans were five times more likely to
fall victim and roughly half the people who were steered into these
expensive traps could have got cheaper deals.

PAUL BARRY (to Mark Seiffert): What's the advantage of a subprime loan
to a broker?

MARK SEIFFERT, HOUSING ACTIVIST, CLEVELAND OHIO: Oh more money. As a
broker you're going to make a hell of a lot more money off a subprime
loan than you are a prime because you're able to charge higher
interest. As a broker, if I can bring you, Mr Banker, a 12 per cent
loan you're going to reward me with more money because I brought you a
more expensive loan. The fact that it's going to go bad doesn't matter
because see, here we play hot potato.

PAUL BARRY (to Mark Seiffert): So you take a fee and you pass it on as
quickly as possible.

PAUL BARRY: Cleveland's East Side is famous for its crime, but what we
saw here was the triumph of the human spirit.

Pastor Andrew Clark's congregation are some of the most disadvantaged
in America. They battle to pay their bills, pray they don't get sick
and are now fighting hard to keep their homes.

But spend two hours at worship here and your faith in human nature
will be restored, because for these people, praise the lord, money
isn't everything.

PASTOR ANDREW CLARK, TRINITY OUTREACH MINISTRIES, CLEVELAND (speaking
at church meeting): Bless souls that live down the street from me! We
claim victory over Satan, we claim victory over death, we claim
victory over division, we claim victory over predatory lenders. We
claimed a victory today because God we know that you're able, we know
you're able to make everything all right. Come one give the Lord a
hand. Now turn around and tell your neighbour that everything is going
to be all right. I feel a song coming ...

CONGREGATION: ... I've got a vision, everything is going to be all
right ...

PAUL BARRY: It's a confident song that everything will be all right.
But the pastor and his flock know there's plenty more pain to come.

PAUL BARRY (to Andrew Clark): Why do mortgage lenders lend to people
if they can't afford to pay the loans back?

PASTOR ANDREW CLARK, TRINITY OUTREACH MINISTRIES, CLEVELAND: Well it's
robbery. You know robbery has been a part of, it's been a part of
world societies since the beginning of time. People have selected
robbery as a source of income and a source of living and they're
designed to take advantage of the disenfranchised. They're designed to
take advantage of people when they're not looking. They're designed to
take advantage of people that are not as educated.

PAUL BARRY (to Andrew Clark): And the system has allowed it.

PASTOR ANDREW CLARK, TRINITY OUTREACH MINISTRIES, CLEVELAND: Yeah, and
the system has in fact tolerated it because there is somebody up top
that is getting fed by the robberies that take place amongst those
that are disenfranchised.

ED KRAMER, FAIR HOUSING INC, CLEVELAND: The banks actually paid the
mortgage brokers to basically defraud their customers and that was
legal.

PAUL BARRY (to Ed Kramer): What do you mean they paid the brokers to
defraud their customers?

ED KRAMER, FAIR HOUSING INC, CLEVELAND: Well, they would pay a bonus,
a Yield Premium Spread, it was called. If somebody could have got a
conventional loan which would have been fixed at maybe five and three
quarters, they put them into subprime at eight or nine per cent, they
got a bonus which was called a Yield Premium Spread, for putting the
person into a worse loan and that was understood and acceptable. It
wasn't illegal to do.

(to Henry Mitchell): The other thing we can do, we'll go to the bank
and try to get them to modify your loan. Banks don't really want these
houses and since you can pay a reasonable amount there is a chance we
can get the banks to agree to modify your loan so you can stay in the
house and keep your American dream.

PAUL BARRY: Ed Kramer is a Cleveland lawyer who's spent the last 30
years trying to help people like Henry Mitchell hang on to their
homes.

In a good year he might bring happiness to 50 or 60 clients, but he's
now realised there's a better way to fight the fight.

Kramer is suing Argent, one of America's biggest subprime lenders, for
unfair lending and together with Ohio's new Attorney-General he's
eyeing up an even bigger target.

ED KRAMER, FAIR HOUSING INC, CLEVELAND: The real 800-pound gorillas is
Wall St and they're the ones that financed these predators to be able
to go out and do the damage, because without them predators would have
had their lines of credit exhausted. Without buying these and
reloading the predators to go out to give more loans, so they can
resell these loans again, we wouldn't have this crisis. So Wall St is
ultimately going to be the people that have to come through with the
money.

PAUL BARRY (to Ed Kramer): So is there any prospect of them being
sued?

ED KRAMER, FAIR HOUSING INC, CLEVELAND: Absolutely, I think they had a
fiduciary duty. I mean, they are the ultimate funders of these
predators and without their money we wouldn't be in this crisis.

PAUL BARRY: But in the meantime there is a human cost to be counted as
areas like inner-city Cleveland are laid to waste.

This house was supposed to be auctioned online last month and you
could have snapped it up for just $1000, but no one bothered to bid.

It's in a reasonable neighbourhood but not for much longer. Empty
houses here are soon vandalised. The aluminium cladding is stripped
off, the plumbing ripped out so the copper can be sold. Next stop is
the wrecking ball.

PAUL BARRY (to Mark Seiffert): How do you see this playing out? What's
going to happen in the next year?

MARK SEIFFERT, HOUSING ACTIVIST, CLEVELAND OHIO: We have a saying
that, you know, the last one out of Cleveland please turn off the
lights. I don't think Cleveland can be saved. It has gotten that bad,
and keep in mind we've not seen the beginning of it. It is bad and you
guys toured, walked around and saw some of the devastation. That's
nothing compared to what we're going to have.

PAUL BARRY: The figures suggest that the worst is still to come. This
year and next $900 billion dollars of subprime loans are going to
reset to higher interest rates. Taking time lags into account, we are
essentially here on the graph (graph showing bar highlighted for Sept
07, last bar is July 08, highest bar is at March 0. In California as
in Cleveland we're nowhere near the end.

PAUL BARRY (to Jimmy Adams): Do you think we've seen the worst yet?

JIMMY ADAMS, REAL ESTATE AGENT, RIVERSIDE, CALIFORNIA: No I don't. My
projection and the way I look at this and have studied it is that we
are in the end of the first quarter of a four quarter game.

PAUL BARRY: Last week's US employment figures, showing a fall in job
numbers, sent world stock markets spinning again. In the last 18
months, 150 US mortgage lenders, including several of the biggest,
have gone bust or shut down. So far 60,000 jobs have been lost, with
another 50,000 forecast to go. House builders are also in trouble with
activity at a 10 year low and more homes than ever that can't be
sold.

Some economists like Professor Nouriel Roubini are now convinced that
recession is inevitable.

PROFESSOR NOURIEL ROUBINI, STERN SCHOOL OF BUSINESS, NEW YORK: We had
the real estate boom and bust in the late 80s that led to a recession
in 1990, we thought we had learned those lessons and instead it has
happened again. We had that bubble in tech stocks in the late 90s that
led to a bust and the recession in 2001 so the last three US business
cycle and recession have been driven by asset bubble getting out of
hand and then having a crash that lead into a credit crunch and then a
severe economic downturn, so they happen over and over again.

PNN: And you think this is the third? The next one?

PROFESSOR NOURIEL ROUBINI, STERN SCHOOL OF BUSINESS, NEW YORK: Yes.

PAUL BARRY: In the last few years the USA and Australia have seen a
massive spending spree fuelled by credit. A large chunk of the $1.3
trillion lent in subprime loans got spent in the shopping malls and
car yards of America. People were using their houses like automatic
teller machines, taking cash out as prices went up.

Now that is all going to go painfully into reverse and the US economy
will suffer. So the question is: will Australia also be affected?

PROFESSOR NOURIEL ROUBINI, STERN SCHOOL OF BUSINESS, NEW YORK: If the
US has a hard landing meaning a recession or a near recession, I think
that it's still the case that when the US sneezes the rest of the
world gets the cold because the US is still one quarter of the global
economy.

SATYAJIT DAS, AUTHOR, "TRADERS, GUNS AND MONEY": I don't think anybody
anywhere in the world is going to be immune. It's a question of degree
rather than whether they're affected.

PAUL BARRY: Many economists are still optimistic that it will all play
out without too much damage. Bruce Kasman is Chief Economist for JP
Morgan, one of the world's largest investment banks.

He's not saying don't worry, but he is saying don't panic.

BRUCE KASMAN, HEAD OF GLOBAL ECONOMIC RESEARCH, JP MORGAN: I think the
risks are not things we want to ignore but I think the risks of a
recession right now are still rather modest.

PAUL BARRY (to Bruce Kasman): What do you say to people like Nouriel
Roubini who is very pessimistic about the state of America and I guess
the implications for the rest of the world?

BRUCE KASMAN, HEAD OF GLOBAL ECONOMIC RESEARCH, JP MORGAN: Well, I
speak to Nouriel Roubini. I'd note that Nouriel Roubini has been
pessimistic for as long as I've known him but I think the basic point
here is to keep an open mind. I would not want to lose sight of
downside risks. The credit events that are playing out here are things
which we still don't know how significant and long lasting they're
going to be, but to recognise that that's happening in a healthy
cyclical backdrop.

So far it's happened in a world in which the tightening in credit
conditions haven't extended out broadly in the way that previous
global financial crisis have hit and to think about this as a world in
which we are getting hit but there's no reason I think at that this
point to turn extreme and believe that the only outcome here would be
a recession or some serious financial crisis taking hold.

BEN BERNANKE, CHAIRMAN, US FEDERAL RESERVE (speaking at US Congress
hearing): The recent rapid expansion of the subprime market was
clearly accompanied by deterioration in underwriting standards and in
some cases by abuse of lending practices and outright fraud.

PAUL BARRY: Tomorrow in America, the Chairman of the US Federal
Reserve Ben Bernanke, is almost certain to cut interest rates, perhaps
by half a per cent. The optimists believe this will be enough to avoid
a crisis and to stop the meltdown going further. The pessimists fear
that fear itself has already got the upper hand.

SATYAJIT DAS, AUTHOR, "TRADERS, GUNS AND MONEY": Once credit markets
seize up, fear, and it's the fear of who you lend to, who you transact
with defaulting, becomes the paramount concern.

PAUL BARRY (to Satyajit Das): So no-one lends to anybody because
they're afraid they won't get their money back. Even the banks.

SATYAJIT DAS, AUTHOR, "TRADERS, GUNS AND MONEY": Absolutely. In fact
one of the ironic things about the liquidity that's flooded into the
system is it's gone nowhere. It's just sitting there. People have
parked it in government securities because they're terrified of
lending to anybody in case they won't lend it. And central bankers
have been essentially resorting to what I would only call pleas, for
people to behave more sensibly.

PAUL BARRY: The damage so far in Australia has been limited but the
credit crunch already has us paying more for our mortgages.

We've seen two Australian hedge funds go bust for hundreds of millions
of dollars, RAMS Home loans and Macquarie Bank have been battered by
the markets, and several municipal councils have lost millions on
subprime investments.

As to what happens next - well, no one really knows. But if you're
convinced a crash could not happen here, just consider this history
lesson from Bob Shiller.

PROFESSOR ROBERT SHILLER, ECONOMICS, YALE UNIVERSITY (referring to
graph): The blue line here shows real home prices in the Herengracht
region of Amsterdam since 1629; from 1629 to 1973, and you can see
that there have been periods for like a half a century when they went
up, and periods like a half a century when they went down.

PPR: I guess the interesting thing about this graph is that whenever
it goes up it comes down again.

PROFESSOR ROBERT SHILLER, ECONOMICS, YALE UNIVERSITY: That's right.

PPR: I mean it doesn't go up and go along the top. It goes up and it
goes whoom.

PROFESSOR ROBERT SHILLER, ECONOMICS, YALE UNIVERSITY: You know some
people think that home prices go up 10 per cent a year. Do you know
what Amsterdam would be worth today if it went up 10 per cent a year
for the last 350 years? And if people know about the power of compound
interest it would be worth more than the solar system or something. It
can't happen.

So if you look about long term trends in real estate maybe one per
cent a year, tops, over long, over centuries. Otherwise it's just, it
doesn't fit. It's just not going to work.

PPR: No one would be able to afford a house.

PROFESSOR ROBERT SHILLER, ECONOMICS, YALE UNIVERSITY: No one could
afford it.

LONDON (Thomson Financial) - Beleaguered UK mortgage lender Northern Rock PLC has opened its books to US hedge funds, the Daily Telegraph reported, citing no sources.

Chris Flowers, a veteran Wall Street dealmaker who has experience of taking over troubled banks, has been given access after making a takeover proposal.

His offer, via private equity firm JC Flowers, is believed to be the sole approach that would keep the bank together. Other potential bidders, which include a private equity group led by US firm Cerberus, plan to break the bank up and divide the assets between them. julie.crust@thomson.com jc/hjp

Looks like the carve up has started, you see the whole episode was simply a way of shaking the tree.
People like the atheist Warren Buffet have made billions and billions as have the Rothschilds. Remember Jimmy Goldsmith?
Spread some rumours, have a run on a share price, even sell short to drive it down further, then swoop and buy up all the assets in a fire sale._________________

Of course the system is a sham, if enough people went to withdraw their money out of the banks then the system would be exposed for what it is.

Further yesterday the BBC used smoke & mirror tactics stating that normally banks led on customer savings. While this is partially true, what they keep joe public in the dark about is that they do not lend the savings, they simply use the amount of savings (as well as their deposits with the BOE) as a base to lend up to 10 times or more that amount.

Simply creating imaginary money out of thin air.

95% of all so called money does not exist anywhere other than on a computer screen.

I'd suggest this is an opportunity to get the superb money is debt video out to the people to expose this sham.

There is financial collapse in the USA now and we would be silly to think it will not affect us.
The modified rain storms of late will also add to insecurity about flooding and house insurance.
Financial collapse?

I read in yesterday's paper that major banks had refused a bung of some fiat money from the BOE for fear that the bung itself might trigger a "crisis in confidence" (that peices of paper objectively mean something)_________________Free your Self and Free the World

Eurozone policymakers will urge the US and other countries at the next G7 meeting to take a strong stance against exchange rate volatility in an effort to halt the dollar’s decline against the euro, European Union officials said on Tuesday.

Finance ministers of the 13-member eurozone plan to forge a common position in Luxembourg next Monday, 11 days before the meeting in Washington of central bankers and finance ministers of the Group of Seven leading industrialised countries.
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Markets continue to rise but US dollar slides
By Nick Beams
3 October 2007

In the two weeks since the US Federal Reserve Board cut interest rates by half a percentage point in response to the crunch in credit markets, stock markets have taken off. On Monday, the Dow Jones index closed at over 14,000 points, a new record. Similar market rises have been registered around the world.

But while the interest rate cut has given equity markets a boost, there are clear signs that long-term problems in the global economy are coming to a head.

The area of greatest concern is the value of the US dollar, which has fallen continuously since the Fed’s moves on interest rates.

An article in the Economist magazine last week posed the question: “When does a gentle slide become a dangerous skid?” The dollar, it noted, was now at a new low against a basket of major currencies. In the month of September, it fell by 4.5 percent against the euro, to reach a record low of almost $1.43.

While the falling dollar provides a boost for American exports, it has the opposite effect on European exporters and the impact is starting to be felt. French president Nicolas Sarkozy recently stated that an increase in the euro above $1.40 was a “problem” for euro zone competitiveness.

Jean-Claude Juncker, the prime minister and minister of finance of Luxembourg, said Europe could no longer accept footing the bill for global imbalances. The issue, he declared, would be discussed at the Group of Seven meeting of finance ministers and central bankers in Washington on October 20.

According to Sarkozy, the euro zone “should not be the only area in the world where the currency is not put at the service of growth.” In other words, the currency should not be allowed to rise so high as to price European exports out of world markets. Nor should the European Central Bank set interest rates so high that they boost the value of the European currency. On what basis, then, should the value of the euro be set?

This question is always fraught with difficulties for central banks trying to regulate the exchange rate of their currencies. In the case of the euro, however, the problems are compounded by the fact that it is not the currency of a single nation, but of thirteen.

As Financial Times columnist Wolfgang Munchau noted in a comment on Monday, if the euro were set against a basket of currencies, including the British pound and a large number of central and eastern European currencies, this would imply devaluations against currencies of other member states in the European Union. In other words, the currencies of other countries in the EU would be rising against the dollar while the euro was going down. “I can think of no more effective way to blow up the single market,” Munchau wrote.

Another problem posed by the falling dollar is the possibility that countries that have pegged their currencies to the US currency, and have made large investments in US financial assets, may start to look elsewhere. On September 18, a tremor went through financial markets immediately after the Fed’s interest rate cut when the Saudi government did not follow suit, as it has done in the past. This was taken as an indication that the Saudi regime could be looking to shift some its financial reserves out of the US.

China is also adversely affected. If it wishes to maintain parity of its currency with the dollar, and so protect export markets, it will have to buy dollars at an even faster rate than at present. If, on the other hand, it decides to let the yuan rise, it will suffer a massive loss on the hundreds of billions of US financial assets that it currently holds. At the same time, there is the danger that if it starts to shift out of dollar assets it could set off a run on the US currency.

A Financial Times editorial on September 21 declared: “A decline in the dollar would be welcome if it was slow, but if foreign investors anticipate inflation and start to dump some of their $12,000 billion in US debt, it could turn into a rout. In the worst case the Fed would lose some control of monetary policy, with long-term rates responding to foreign selling no matter what the Fed did at the short end, and the economy plunged into recession.”

Further evidence of the general uncertainty in currency and financial markets is reflected in the fact that gold—an historical hedge against all forms of paper money—has been steadily rising over the past weeks and now stands at a 28-year high of around $743 per ounce.

Bank losses

Even though share markets have received a boost, it appears that problems in credit markets are far from over. On Monday, the Swiss bank, UBS, announced that it had made a loss in the third quarter and the American bank, Citigroup, warned that profits for the quarter would drop by 60 percent compared to the same period in 2006.

UBS said its losses for the quarter would be between $515 million and $690 million as a result of a $3.4 billion write down in the value of fixed-income assets, many of them securities backed by US subprime mortgages. Citigroup announced write-downs of $1.4 billion on leveraged buyout commitments, as well as losses on mortgage-backed securities. It is expected to suffer a 60 percent fall in profits for the third quarter.

These losses are expected to extend to other banks. Deutsche Bank has warned that it will suffer a hit from the market turmoil, but has yet to reveal the extent.

Moreover bank losses may continue beyond the third quarter. According to the Global Financial Stability Report, published by the International Monetary Fund last week, the potential consequences of the credit crunch should not be underestimated and “the adjustment process is likely to be protracted.”

The report pointed out that the threat to financial stability came from a “funding mismatch” in which medium-term, illiquid and hard-to-value assets, such as complex credit securities, were being financed by very short-term money-market securities. In other words, for all its complexity, the credit crisis boils down to the disparity between short-term borrowing and long-term lending.

The IMF report noted that “while potentially helping [to] protect the financial system from concentrations of credit risks in banks, the dispersal of structured credit products [the process by which long-term debts were brought together in large packages and then sold off] increased uncertainty about the extent of the risks and where they are ultimately held.”

This “originate and distribute” model meant that many institutions “could choose not to hold the credit risk they originated, reducing their incentives to monitor borrowers.” In other words, financial brokers could collect big bonuses on loans of dubious quality knowing that the debt would rapidly be sold off.

However since banks were often financing the purchasers of the “structured credit products” the result is that “risks that appear to have been distributed may return in various forms to the banks that distributed them.” To what extent remains to be seen, but, together with the fall in the dollar, this could be a significant factor in the creation of instability in financial markets in the coming period.

Thousands of Northern Rock customers queued to withraw their money in September
Philip Webster, Political Editor
Taxpayers could face a multimillion-pound bill for the rescue of Northern Rock, after Alistair Darling refused to give a guarantee that the £24 billion Bank of England loan will ever be fully repaid.

Mr Darling was told that his job was on the line yesterday in acrimonious scenes in the House of Commons, when he was accused of reneging on clear promises.

Under questioning in the Commons, the Chancellor insisted that the Government “fully expected” to get back the £24 billion that the Bank of England had lent to the troubled bank because the money was secured against its assets.

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